Public Bill Committee

[Mr. Peter Atkinson in the Chair]

Schedule 1

Information to be included in a prospectus for a BRS

Amendment proposed (this day): 35, in schedule 1, page 22, line 16, at end insert
11A A description of the arrangement by which persons paying the BRS shall be represented upon the governing body of any organisation set up for the purpose of delivering the objectives of the BRS, or if, such organisation is not to be set up, how such persons are to be involved in the oversight of the delivery of those objectives..(Robert Neill.)

Question again proposed, That the amendment be made.

Daniel Rogerson: When we adjourned, I was drawing to a close my remarks on the amendment tabled by the hon. Member for Bromley and Chislehurst, regarding some body that would have oversight and ensure that business had a role not just in supporting the business rate supplement and, of course, funding it, but in ensuring that the way in which the project was taken forward had the benefit of business insight and experience.
Although the proposal in the amendment would no doubt need a great deal of refining regarding how such a body should work, who should be represented and so on, it is helpful. I shall thus listen with interest to the rest of the debate before deciding whether to support it.

Philip Dunne: I support the amendment tabled by my hon. Friend the Member for Bromley and Chislehurst, along with myself and other Conservative Committee members.
During the evidence sessions, I was struck by the fact that, at the outset, the Minister indicated that he was keen to listen to representations and willing to take on board those that appeared to make a positive contribution to improve the Bill. It is in that context that I support the amendment.
One of the factors that has led to the success of business improvement districts is the active engagement of those who are taxed in the implementation of the measure for which the tax has been raised locally. One of the major drawbacks of the Bill is that there is no mechanism for the businesses that consent through ballot to be charged in this way to have some involvement in the delivery of the project. It is not just about those businesses being a voice on a decision-making body. They also feel that they can help to ensure that the project will be delivered on time and on budget. That is what businesses do, or seek to do, day in, day out, when managing their activities. That is also what the Government seek to do when introducing measuresparticularly large infrastructure projectsalthough I regret to say that Governments of any hue are not perhaps as successful in achieving the delivery of major infrastructure projects on time and on budget.
It would be interesting if the Minister could, from his ministerial experience, mention any projects of such a scale that have come in on time and on budget without the involvement of significant figures from the business world to help push them through. That is not to cast aspersions on the quality of either the ministerial team or its civil servants, who are responsible for implementation, but the harsh fact is that they are, by definition, less experienced in delivering major projects than the private sector. That is why this matter is important and why I am pleased that my hon. Friend has moved an amendment that would enable consideration to be given to allowing business a voice at the table and, thereby, allowing a role for them in ensuring the delivery of the project. They do not need to take the lead role, but their advice will be available if they have a seat at the table, and one would hope that that would help achieve the objectives of the levying authority that has succeeded in securing the charge.
Now the Minister is in his place, I shall repeat what I said at the beginning. He said graciously in the evidence sessions that he would be willing to listen to representations made from outside bodies as well as Opposition Committee members. I hope that he will take on board the intent behind the amendment. Although it might not be as skilfully drafted as he might wishI am sure that my hon. Friend the Member for Bromley and Chislehurst would accept revisions or alternativeswe would like to hear the Ministers response to the intent behind the proposal.

Brian Binley: I support the very important remarks made by my hon. Friend the Member for Ludlow, who has had a distinguished business career and is well versed in the work of business generally. I listened this morning to lots of argument and many claims of intellectualism. I am a practical man, as most business men tend to be, and that practicality is the very essence of the need for business to be involved. We have enough intellectualism to keep us going for many yearsmuch of it sitting in this House. One of the things that we lack in this place is a practical and pragmatic approach to problems and the world of business generally. For the Government to eschew the opportunity for practical business involvement in any project that a local authority may wish to pursue under the Bill seems to be looking a gift horse in the mouth and refusing it.
I have already made the point that previous Government projections, both national and local, for sizeable infrastructure projects have been, in most peoples eyes, deplorable. I do not wish to embarrass the Governmentthis Government or previous ones, franklyby going through a list of projections that proved to be so way out on their final total as to be embarrassing. We do not have to get started on the process of the Olympics to any great extent to know that to be the case. Crossrail saw sizeable increases in financial projections, and I do not believe that we are at the end of the game yet. The Governments performance is decidedly poor in this area, yet there is an opportunity now to involve business, which is considerably more adept at the process. I hope that the Minister will accept the arguments made by business itself to be involved in the process and welcome the proposal with open arms.
This Government have talked a great deal about open government and transparency in government, yet they are now closing down the financial and management aspects of a given project from the very people who will be called on to pay quite a lot of money in support of that project, even though the expertise in the business sector far outweighs the expertise in that respect in government. This Government were specifically concerned about scrutiny in local government. They specifically made the point that there should be wider involvement in scrutinyinvolvement greater than that of the elected members themselvesand provided the opportunity for other bodies to be involved in the whole scrutiny process of local government, yet now the Government are closing that down under the Bill. May I remind the Minister that we are talking about the possibility of sizeable private finance initiative projects linked to the tax? We have not explored that in great depth.

Peter Atkinson: Order. The Chair has to take a pragmatic view of the hon. Gentlemans speech and he is getting well out of order. This debate is about the schedule on what goes into a prospectus.

Brian Binley: With respect, Mr. Atkinson, I seek your guidance. I thought that the debate was about amendment 35. I put it to you with all the good manners that I can muster that my remarks are relevant to the amendment. However, I will take your advice and wind upthat is what you are saying to me in a gentle way.
To reiterate, there are those with skills in the business sector who would be willing to become involved in the scrutiny of such a project and to offer their expertise, knowledge and experience. If I am offered cheap expertise at that level of importance, I take it with alacrity, and I hope that the Minister would too.

Sadiq Khan: I take all offers of cheap advice that I am given, and I take the hon. Gentlemans contribution with the good grace with which it was given. The hon. Members for Northampton, South, for Ludlow, for Bromley and Chislehurst and for North Cornwall all raised the same point in their contributions on this amendment: we need to take on board the expertise in the business sector. As my right hon. Friend the Minister for Local Government said during previous sittings of this Committee, that is clearly our intention.
The hon. Member for Bromley and Chislehurst spoke about a process of dialogue, partnership and collaboration. That is our intention as well. The amendment, however, would limit local flexibility. I listened carefully to the reasons why it was tabled. My concern, notwithstanding the comments made, is that if we are not careful, we here in Whitehall and Westminster will add further bureaucracy and prescription. That said, we all know that there is a 12-week period of consultation on the draft guidance. We will look at the comments made and, if need be, come back to the measures.
We in the Labour party believe in devolving power to local authorities. We believe that the power to make decisions regarding areas should rest at the spatial level that is best placed to know and understand the facts at hand. My concern is that the amendment would require levying authorities to set out expressly in their prospectus how they will involve stakeholders in the delivery of BRS objectives. That implies that levying authorities should set up a BRS governing board.
The Bill sets out a flexible framework with safeguards within which local authorities should operate to levy a BRS to fund a project aimed at economic development. It already requires levying authorities to set out in their prospectus how they will provide business with information about progress on a BRS-funded project, notwithstanding the fact that we are consulting on the draft guidance and will listen to the comments made by business.
On Second Reading and during the course of this Committee, we have discussed that BRS may be used in many different ways to fund many different projects. Each local authorityrural local authorities and those in urban areaswill have developed in partnership with local business a project and prospectus particular to its needs and long-term vision.
Every area is different and has different needs, different levels of partnership, and different resources at its disposal. It is vital that we provide local authorities with the flexibility to set up and tailor their own governance procedures for projects, just as we expect businesses to innovate rather than allowing central Government to impose a way of governing their businesses. For example, a project might be managed by a few key local businesses or by the services of an outside contractorI know that that is a particular concern of the hon. Member for Northampton, South, who has mentioned the private finance initiative on a couple of occasionsand each would require a different method of governance.
I accept that clear governance procedures that involve local business should be set out, but the amendment goes further and would limit flexibility. We should not bind the hands of local authorities and businesses in managing their projects.

Bob Neill: I am grateful for the spirit in which the Under-Secretary is responding. There might not be a great deal between us in practice. I understand his concern that we might reduce flexibility, but I ask him to consider that the wording of the amendment, although not necessarily perfectI am open to suggestionsposits two situations. The first is that a special purpose body or organisation is set up to deliver the BRS. The prescription is that there should be some representation on the governing body, whatever that may be. Secondly, to meet the point made by the Under-Secretary, this can be done through an existing organisation, contractors or whatever. If such an organisation was not set up, a statement would have to be made in the prospectus on how business was to be involved in the delivery. That would not tie hands to such a degree, and I hoped that that might address his point.

Sadiq Khan: That intervention was really helpful. This is not our last chance to amend the Billthe House will have other opportunities. I shall speak to officials, having taken those comments on board. I understand the tenor of the hon. Gentlemans comments and those of his colleagues and the hon. Member for North Cornwall. My right hon. Friend the Minister for Local Government has said the same thing in different wordsas someone said, less illuminating. I shall consider the point. For those reasons, I respectfully ask the hon. Member for Bromley and Chislehurst to withdraw the amendment.

Bob Neill: I am grateful to the hon. Gentleman for that response. I hope that we can pursue the matter in the way that he suggests, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1 agreed to.

Clause 6

Consultation

Daniel Rogerson: I beg to move amendment 9, in clause 6, page 4, line 6, at end insert
(d) any parish council in the affected area..

Peter Atkinson: With this it will be convenient to discuss amendment 15, in clause 10, page 6, line 11, after persons, insert
as specified in section 6(1).

Daniel Rogerson: Those members of the Committee who were privileged to serve on the Committee that considered Bill that became the Planning Act 2008several are here todaymay recall that I moved a similar amendment to that legislation. Parish councils should be explicitly mentioned in the Bill as consultees at crucial times.
It would be generally good practice to send out the signal that parish councils play a most important role in many parts of the country. Like the Minister, I have met representatives of the National Association of Local Councils, whose members are keen to have the opportunity to contribute to all such debates, and their views should be remembered. All levying and billing authorities have regular contact with their parish councilsat least, the good ones doand there will be strong communication between them. It would send out the wrong signal were we to miss out the parish councils when considering such matters. We should give them the opportunity to comment on important prospectuses of the sort provided under the Bill.
As always, local government is changing. The hon. Member for Ludlow is no longer in his place, but his local authority of Shropshire, like mine, Wiltshire and Northumberland, is going through the process of becoming a unitary authority. Part of Cornwalls bid was that the parish councils role should be enhanced; as the district council tier disappeared, it was acknowledged that parish councils, especially the larger ones, would be important in ensuring that decisions were taken locallya consideration that was agreed to.
As a Member with a constituency that includes 70 parish councils, I can say that their meetings play an important part in all decision making. The district councils, North Cornwall district council, Restormel borough council and Cornwall county council have a good record of co-operation. However, that is not necessarily a given. When such important decisions are being taken, it is necessary to underline the fact that local councils should have the opportunity to be involved.

Bob Neill: I am impressed by the points made by the hon. Member for North Cornwall. Bromley does not have parish councils. I had the pleasure of serving on the Committee that considered the Local Government and Public Involvement in Health Act 2007, where I had some lengthy debates with the Minister about whether at some point in our history there might have been a parish council in Pratts Bottom. Thanks to that legislation there is one now. Pratts Bottom is adjacent to the Kent parish of Badgers Mount.
There is now a power to set up parish councils in London, so the right hon. Member for Greenwich and Woolwich and I might find that we have parish councils at some point and that they wish to be involved in the activities that flow from the Bill. Last weekend I happened to be in Wiltshire and had the chance to meet members of and candidates for the new unitary authority, along with some of its officersthe transition team. It is clear, and I take the point, that whatever ones views, such bodies are a fait accompli in some parts of the world. There is clearly the scope and the desire across the political spectrum to give parishes and local councils an enhanced role in those structures, as you will know, Mr. Atkinson, from your experience in Northumberland, so it is timely to recognise their legitimate role. Hexham is an example of a town council that is probably involved with businesses in its area, so it has a legitimate locus in these matters. I hope that the Ministers will look favourably on an amendment that does not create onerous burdens, but opens up opportunities for those bodies in the current circumstances.

Sadiq Khan: The amendments would change the requirements on levying authorities to consult before introducing a BRS. The amendment moved by the hon. Member for North Cornwall would require authorities to consult parish councils. Before I deal with his argument, let me put his amendment in the context of the Bill.
The Bill requires local authorities in two-tier areas to consult their lower-tier authorities. Those are the district councils or, in London, the boroughs and the common council. In part, that is because those authorities will act as the billing authority for the supplement, alongside their existing role of collecting business rates more generally. The two tiers of government will also need to work together to ensure that the proposed project is consistent with other initiatives in the area.
As set out in the draft guidance for consultation published on 23 January, levying authorities will need to consider how their BRS fits with the sustainable communities strategy and the priorities set out in the local area agreement. As such, levying authorities will need to consider how the proposed project fits with the existing plans for the area. Clause 6(1) provides that levying authorities will need to consider consulting those who might be affected by the proposed project, over and above those who will be liable for the supplement and the lower-tier authorities in a two-tier area. That could include parish councils, as a levying authority will want to ensure that a proposed project is consistent with other plans for the local area. However, depending on the project, that might not always be appropriate and it should therefore be left to the discretion of the local authority, rather than being mandatory.
Amendment 15 would define relevant persons for the purposes of consultation on a proposal to vary a BRS under clause 10. Clause 10(5) makes it clear that when an authority consults on a proposal to vary a BRS, it should consult those who are liable for the supplement and those who will become liable should the variation go ahead. That is an important protection for taxpayers as it ensures that all those who will be liable for a BRS, either from the outset or because of a variation in an existing project, will have the opportunity to have their say. If the amendment were accepted, that protection would be lost, and I therefore ask the hon. Gentleman to withdraw his amendment.

Daniel Rogerson: I am not having much luck convincing Ministers that relatively small changes, such as the provision for prospectuses which we debated under clause 5, are safe enough to include in the Bill. There seems to be a concern that they are radical changes that might blow things apart. They are not necessarily radical changes, but they are quite important in signalling the intention that these consultations, discussions and debates should be open and inclusive, to allow important organisations such as parish councils to contribute. I am somewhat disappointed that the Minister has again chosen not to accept the amendment. I would welcome any reassurance that, in the guidance and information coming out with the Bill, a reference will be made to local councils.

Sadiq Khan: I think I can give the hon. Gentleman the reassurance he seeks. All our consultations are genuine, but this one is even more so than normalit is genuine squared. I understand that rural parts of the country have different needs to urban parts and that is one of the reasons for the flexibility. I take on board his concerns and we will see what the consultation over the next 12 weeks delivers.

Daniel Rogerson: I am grateful to the hon. Gentleman. The Government have clearly acknowledged that local councils play an important part in many areas of the country. Our debate the amendment underlines our recognition of that fact. I will not press the amendment to a vote, as to do so would delay the Committee to no great purpose. However, it is important that we have the debate and that local councils know that we are aware of their existence and the important role they play. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Bob Neill: I beg to move amendment 26, in clause 6, page 4, line 21, leave out think and insert consider.

Peter Atkinson: With this it will be convenient to discuss the following: amendment 19, in clause 24, page 15, line 8, leave out thinks and insert can demonstrate.
Amendment 34, in clause 24, page 15, line 8, leave out thinks and insert considers.

Bob Neill: Amendments 26 and 34 will, I hope, not be regarded as the product of a mind too long exposed to legal textbooks. They were tabled to probe the Governments intentions. It strikes me that, in this context, the use of think might jar, so the amendment replaces it with considers. The relevant part of the subsection states:
For the purpose of subsection (1)(c), a levying authority must, in particular, think whether it would be appropriate to consult persons who the authority thinks might become liable to pay a chargeable amount.
Leaving aside the fact that if we were playing Just a Minute we would lose a point for having two thinks in the same sentence, the wording implies that the authority must go through a thought process which ought to be of a fairly considered nature and ought to involve a measure of weighing of evidence and judgment. It seems to me that in that context, as in clause 24, to which amendment 34 relates, considers is perhaps the more appropriate word, not least because it might be that if a body with a legitimate interest felt that there had not been appropriate thought or consideration given, they might seek remedies elsewhere. Considers is often used in such a context to imply a rational and dispassionate way of weighing options and coming to a conclusion. It seems that the requirement is that the local authority should come to a conclusion about the class of persons referred to, so consider is therefore a better word.
Put another way, one can conceive of circumstances where think can suggest a process that is not an entirely rational, objective or quasi-judicial in nature. One can have an irrational thought and one can have an unreasonable thought. One would hope that a local authority, in this context[Interruption.]

Nick Raynsford: Will the hon. Gentleman give way?

Bob Neill: I am not sure what it was that provoked the right hon. Gentleman to rise. If it was an irrational thought, then I am happy to give way to him.

Nick Raynsford: The hon. Gentleman has got me thinkingor perhaps considering. What were the reasons for him choosing to substitute think in line 21 with consider, but to leave thinks in line 22 and not substitute considers? What thought process led him to the conclusion that the Bill would be improved by his doing it one way around rather than the other?

Bob Neill: First, it seemed to me that it might be more elegant to have two different words within the same clauseI know that the right hon. Gentleman likes to see elegance in all things. Secondly, two different considerations seemed to be implied. The second think is the trigger for the authorityit thinks persons might become liable to the charge but, once it has thought that, it then has to go through a process of consideration. That is implied at the beginning of subsection (1)(c). There are two subtly, but perhaps importantly, different thought processes. The use of consider recognises the subtle difference more appropriately and would improve the wording.

Daniel Rogerson: Amendment 19, which stands in my name, refers to a later clause, but deals with a similar issuea clear indication that the use of any power requires a little more than some thought.
Clause 24, which talks about a power for a national authority to cancel a BRS. The thought or considerationwhether it is rational or irrationalbehind amendment 19 is to ensure that if the Government or any of the national authorities in England or Wales seek to intervene or to act in such a draconian way against a local community which, with its business organisations and representatives, has chosen to move forward on a BRS, they must do so on the basis of some great problem with the BRS, and not because they just happen to be concerned for some reason about one or two aspects of the project involved.
Like the hon. Member for Bromley and Chislehurst, I seek a slight change. Unlike him, I have not had great exposure to legal textbooks. I am sure that I am all the poorer for that, although at the same time I cannot help but feel a bit grateful. I hope that the Minister is able to see the thought or consideration behind the amendmentthat there should be a need for a national authority, if it is to act in such a way, to demonstrate that there is a big problem.

Philip Dunne: It may seem strange to rise on a point that, on first sight, appears to be somewhat obtuse. Having said that, we should remember when we draft legislation that the language we use will govern the conduct of local authorities for years if not decades to come and it needs to be as precise as possible.
I have considerable difficulty with repeated use of think. I have served on a local authority and I know the processes involved in arriving at decisions when such subjective language is left in legislation. It is possible for an authoritys view to be determined through a process of discussion and, if necessary, vote-taking in a council chamber or committee. Consider or demonstrate imply that a process has been followed appropriately by the authority, whereas think is capable of interpretation by a layman such as I. I do not have the benefit of my hon. Friends exposure to interpretation of legislation, and we are merely here to assist Ministers in drafting it, but using more precise language, which implies that a process has been gone through rather than just thought about, would seem to me to be more appropriate. I hope that the Minister will reflect on that and recognise that none of the amendments is contentious and they could, therefore, be accepted.

Sadiq Khan: I am sure that I speak for the hon. Member for Bromley and Chislehurst, but we do not hold a lack of legal experience against the hon. Members for Ludlow and for North Cornwall.
At the core of the amendments are the relative definitions and strength of think versus consider, which is the nub of the matter affecting clauses 6 and 24. I shall discuss the effect of each amendment in turn. Amendment 26 to clause 6 would require levying authorities to consult on their BRS proposals. Those consulted would be those liable to pay the BRS, lower-tier authorities in two-tier authorities and other such persons as the levying authority thinks appropriate. Clause 6(5) requires a levying authority in particular to
think whether it would appropriate to consult persons who the authority thinks might become liable to pay
the BRS before the end of its chargeable period. When I practised law, I was always in favour of using plain English, not legalese and gobbledegook, where possible. However, with respect, this provision is not the best example of either that hon. Members could bring up. I shall explain why in a moment.
Amendment 19, tabled by the hon. Member for North Cornwall, and amendment 34, would affect clause 24, on to which I am sure we shall come later in proceedings. The amendments would replace think in the test of whether the Secretary of State or Welsh Minister should exercise their powers to intervene on or even cancel a BRS. Amendment 26, in the name of the hon. Member for Bromley and Chislehurst, would change think to consider, which he said implied greater analysisI think that I have followed the core reasons for his amendment. However, in truth, the amendment would have no effect. As public authorities, local authorities must reach their decisions in a reasonable and rational way, taking account of all relevant information. That includes decisions on whom to consult, where that decision is left to the local authority. In that context, there is no substantive difference between think and consider. My right hon. Friend the Member for Greenwich and Woolwich demonstrated the reason why there is no real differencethe fact that a change has been proposed to one part of the clause and not another. That proves the point.
Under clause 24, the Secretary of State and Welsh Ministers must also reach their decisions in a reasonable and rational way, taking account of all relevant information. In that context, there is no substantive difference between think and consider. However, I value and endorse the point that there should be greater analysiswhether by the Secretary of State or local authoritiesof an issue when deciding whom to consult or whether to intervene in a BRS. It is only right that all parties involved in a BRS treat seriously the project and proposed supplement. However, on the basis of the substantive effects of the amendments, as I have explained, I hope that the hon. Gentleman will withdraw his amendment.

Bob Neill: I have applied my mind to the Ministers response. I ascertained his point and understand what he seeks to achieve. I am reassured to a degree on this serious point. He rightly stated that the exercise of the powers in the Bill should be proof against judicial review and meet the standard of the Associated Provincial Picture Houses v. Wednesbury Corporation case. We want to ensure wording that achieves that. I am fortified by the thought of the principle that others can refer to debates in this Chamber when seeking to ascertain Parliaments intention. Having got on the record the standard that the Minister anticipates and intends that local authorities should attain, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Mark Field: I will only detain the Committee very briefly. I have just received from one of my two local authoritiesthe City of London Corporationa list of suggested amendments, and I wish to touch briefly on a matter relevant to clause 6: the situation whereby the results of revaluation become known after the initial consultation on a BRS proposal, with the result that properties that were previously below the threshold set in clause 12 move into that chargeable band. I hope that the Minister can give me some guidance, because, as he is well aware, the current revaluation will affect those who are liable to pay BRS. Property values are likely to move in both directions, taking properties in and out of the charge as they cross the threshold, and it is possible that one is slightly less concerned about those that move outside the charge.
The result of the revaluation in London is not due until September. On a highly practical matter, of which I know the Minister is aware, all the London boroughs will have a tight schedule in which to undertake the necessary work for the consultation on, and introduction of, the BRS, so that they meet the proposed timetable in London for Crossrail. It may therefore be necessary to start the consultation before the results of the revaluation are known. Does the Minister feel that it would be satisfactory to have a supplementary, late consultation and to adjust the revised prospectus if it has been issued?
The tight time frame is in part a belt-and-braces concern from the CLC, but there is a concern that the consultation process may start under the terms of clause 6, yet, by the time that the revaluation has taken place, there may be other properties and property owners who should have been part and parcel of it.

Nick Raynsford: Subsection (5) imposes an obligation on authorities to think
whether it would be appropriate to consult persons who the authority thinks might become liable to pay a chargeable amount before the end of the chargeable period.
I should have thought that that gave an authority the opportunity to consider its overall evaluation schedules, to anticipate whether businesses that are currently below the £50,000 threshold might fall within it at a future revaluation, and, in the interests of safety, to draw the net a little wider in its consultation to avoid the scenario that the hon. Gentleman anticipates. Does he not feel that that provides us with the necessary safeguard?

Mark Field: I accept what the right hon. Gentleman says. It is a certain safeguard, but I simply wanted to put the point on the record, and, for the purposes of the ministerial guidance that is published, to alert people, particularly given the fact that we will need a rapid procedure to get Crossrail up and running,. Nothing would be worse than if elements of the consultation were to be subject to a legal challenge by a disaffected property owner or occupier who suddenly found themselves liable for BRS but had not been consulted.
The right hon. Gentleman is right to say that subsection (5) goes some way to meet the CLCs concerns. I make my point simply to alert people to the fact that the revaluation may be more comprehensive than we thought, and I should just like some guidance on the matter from the Minister.

Sadiq Khan: I commend the hon. Gentleman on raising an issue that is important to his constituents and to businesses in his patch. We are alive to the strict timelines, and one reason why we were keen for the Bill to make progress was to ensure that it could meet the Mayors timelines, notwithstanding the revaluation.
The clause sets out those whom levying authorities must consult before introducing a business rate supplement, as my right hon. Friend the Member for Greenwich and Woolwich said. The consultation will provide an important opportunity for local businesses to scrutinise the proposal and to have their say, including making the point about a possible revaluation. We expect local authorities in practice to develop their prospectus with key business stakeholders, but the clause places a statutory duty on them to consult formally all those liable for the proposed BRS. That is reinforced by the draft statutory guidance that we talked about earlier, which again makes the point that local authorities should consider how they will involve businesses in developing proposals prior to the formal consultation. As such, the prospectus and the business case will benefit from their expertise.
Subsection (1) states that before a levying authority can introduce a BRS, it must consult those who will be liable to pay the supplement. That includes anyone whom the authority thinks, based on its proposal, will be liable to pay the BRS from the day on which the supplement is introduced. That is the important point. The authority will also have a duty to consult anyone whom it considers would have been liable to pay the BRS on the day that it was introduced had they not been receiving 100 per cent. relief from the BRS as a consequence of receiving 100 per cent. relief from paying business rates. Authorities are also required to consult any ratepayer who is likely to become liable for the supplement on the basis that their current exemption from the BRS is likely to cease. For example, if BID levies are to be offset against BRS liability, a ratepayer who is not liable for the supplement when the BRS is first introduced might become liable when the BID is complete.
As well as providing for consultation with those who will be liable for the supplement, subsection (1) provides that levying authorities must consult those individuals or groups whom they consider appropriate who might reasonably be expected to be interested in their proposals. In two-tier areas, they must also consult the lower-tier authorities. Subsection (5) provides that levying authorities must also consider whether it is appropriate to consult anyone who is not liable for the BRS at the outset but might become so: for example, ratepayers whose properties have a rateable value approaching £50,000.
Subsection (6) places a duty on levying authorities to revise the prospectus in the light of the consultation if they think it appropriate to do so. In particular, they must consider doing so if the consultation results in significant changes or amendments to the proposal. The duty will be particularly relevant if any changes to the proposed BRS mean that it will support more than a third of the cost of the project, which will require a ballot.
Whether or not a revised prospectus needs to be published will depend on specific local circumstances, so the decision to publish a revised prospectus will rest with the levying authority. The clause ensures that no BRS will be solely the work of the local authority. Local businesses will always be consulted and be part of the BRS process.
As I said in my introductionI commend the hon. Member for Cities of London and Westminster for making this pointthe draft evaluation list for a 2010 start after revaluation will be published by 1 October 2009. I commend the clause to the Committee.

Question put and agreed to.

Clause 6 ordered to stand part of the Bill.

Clauses 7 and 8 ordered to stand part of the Bill.

Clause 9

Regulations about ballots

Daniel Rogerson: I beg to move amendment 13, in clause 9, page 5, line 25, leave out may and insert
must within 90 days of the coming into force of this section.

Peter Atkinson: With this it will be convenient to discuss amendment 14, in clause 9, page 5, line 27, leave out may and insert must.

Daniel Rogerson: At the risk of boring Members who were not present for deliberations on the Planning Bill, I shall again refer back to it briefly. One issue that we debated was that that Bill made provision for regulations, as is customary, but that some of those regulations had a significant effect on how the Bill would affect people in the real world. There was disquiet that the detail of those regulations might influence peoples view of the Bill as a whole, because they were crucial elements of it.
Given that we have had such a lengthy discussion about ballots and when they should be used, it would be useful to tighten up one or two of the regulations. Amendments 13 and 14 would do so, stating that regulations on how a ballot will work should be provided as early as possible. Obviously, the length of time that we have chosen could be made shorter or longer, but it is a means of sending a signal so that people out there in the real world who will need to deal with the provisions will have an early indication, if possible, of how that ballot should take place and what form it should take.
The amendment is probing, but I would welcome the Ministers point of view. I have proposed one or two other amendments to other clauses in a similar vein. Let us put as much information as we can on the face of the Bill now, so that when other Members get a chance to consider it later, they will know exactly what they are dealing with and be clear about how the provisions will affect business communities and the local authorities forced to carry out such consultations.

Sadiq Khan: I thank the hon. Gentleman for his probing amendments. I know that he has experience with the planning board, and I can see why he has tabled them. They are interesting amendments that seek to strengthen the provisions in clause 9 in relation to regulations about ballots. None the less, I will explain why they are unnecessary and why I hope that the hon. Gentleman will withdraw them.
Clause 9 enables the Secretary of State to make regulations in relation to the procedure of a ballot on the imposition of a business rate supplement. Among the topics that the regulators may cover are
the timing of the ballot; the form that a ballot may take; who is to hold the ballot
and
the conduct of a ballot.
Regulators may also provide for the delegation of functions in relation to the ballot.
My right hon. Friend the Minister for Local Government sent a statement of intent to you, Mr. Atkinson, on Friday 23 January, which set out the approach that we intend to take on the secondary legislation that will be needed to give full effect to our proposals for the business rate supplement and to enable levying authorities to exercise the power to levy a BRS. Our intention is that the regulations should come into force as soon as possible after Royal Assent to the Bill. The ballots regulations will contain all the procedural detail, and they must be in force before the first business rate supplement can be levied on 1 April 2010. We believe that the regulations should cover the same issues that the hon. Gentleman proposes. With that reassurance, I hope that the hon. Gentleman will withdraw his amendments.

Daniel Rogerson: I thank the Under-Secretary for his comments. The parallel that I was drawing was with the Planning Bill and the community infrastructure levy. The debate on how that should be implemented has been contentious. I am sure that the parties involved will have their minds focused even more by the economic difficulties that we now face. It was my intention to encourage the Government to be as clear as possible about how the provisions will be enacted, so that the regulators will be given all the information they need as soon as possible. However, I take the Ministers point that further information has been released. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 9 ordered to stand part of the Bill.

Clause 10

Variations

Question proposed, That the clause stand part of the Bill.

John Healey: We have come to an important part of the Bill, which is the provision that we are creating in the legislation framework for levying authorities to make variations to the business rate supplement when circumstances or conditions require them to do so. In framing this part of the Bill, we aim to strike the balance between allowing the local authority, or levying authority, to respond to the particular demands of the economic development project and the funding that it may require while at the same time giving the businesses that may be affected and may be contributing through a BRS a degree of certainty and a safeguard to allay their potential concerns. In framing the provisions in clause 12, Committee Members will see that we have taken the same approach as we have taken in the rest of the Bill.
It is clearly important for local authorities to have some flexibility to deal with changing circumstances. Subsection (1) allows a limited variation, provided that the possibility of the variation and the circumstances in which it is made are set out in the BRS prospectus; andthis is referred to in subsection (12)that the variation will not increase the number of people liable to pay the supplement. This is designed to provide some flexibility to ensure that projects that are funded by a BRS can maintain momentum in the event of a change in their economic circumstances or other circumstances.
Let me move on to the safeguards or reassurances to business. Subsection (2) is designed to protect businesses from any unexpected changes in the supplement arrangements. It provides that the levying authority cannot without due consultation make significant changes that were not foreseen at the outset of the process and therefore not consulted on or, in some cases, voted on at the outset. If the authority wants to vary a BRS in a way that was not foreseen and set out in the original prospectus, it will need to consult on its revised plans. Subsection (2) requires the authority to undertake a number of steps: to publish a document setting out the proposed variation; to consult on those proposals; to hold a ballot in the cases in which the variation will mean that the supplement supports more than one third of the project cost or in which there was a ballot on the original proposal; and to publish a revised prospectus setting out the new arrangements, once the variation has been agreed.

Bob Neill: I rise on a genuine point of clarification. As I understand it, if the effect of the variation is that the BRS supports more than one third of the project cost, there must be a ballot. Is that more than one third of the total project cost as revised? What about a situation in which the variation might give rise to the BRS supporting more than one third of the variation? Should there be a ballot in those circumstances, if there is a shifting of the burden and an increase in the burden? I can conceive of such a configuration, depending on the rest of the funding.

John Healey: We are trying to provide for variations in the business rate supplement. If there was a ballot on the project in the first place, the position is straightforward. If a variation in the business rate supplement meant that the business rate supplement was bearing more than one third of the total project cost, that would bring the revised BRS into the bracket of requiring a ballot. Those are the circumstances that we have in mind.

Daniel Rogerson: It is certainly reassuring to hear what the Minister is saying about the matter. I just seek clarification again. He has probably addressed this point, but I would like it to be absolutely clear. I am talking about subsection (7)(b), which begins:
the document published for the purposes of subsection (2)(a) states that, even though paragraph (a)...does not apply.
This relates to what he said about a situation in which the local authority for some other reason decided that a ballot was necessary on the original proposal. The provision is at the top of page 7. It concerns a situation in which the local authority decided to go to a ballot even though it did not have to on the original proposal. If it called for a ballot on the original proposal, will it now automatically go to a ballot in the event of a proposed variation, or does it again get to decide whether that is necessary? I would like that to be addressed. If it is automatic that a ballot at the beginning means a ballot on a variation, that addresses the point, but if the local authority gets to take a view for a second time, one could conceive of a situation in which there had been a ballot that approved the proposal, but the variation meant that perhaps the original ballot[Interruption.] I hope that the Minister can understand the point that I am trying to make.

John Healey: The hon. Gentleman will find by careful reading of subsection (2)(c) alongside subsection (7)(b) that the provision means that, irrespective of the reason for the ballot in relation to the original project and BRS proposalwhether it was required under the one third rule, or the local authority decided to hold a ballot despite not being required to do soa formal variation to the BRS that was not anticipated and set out as a possibility in the prospectus would follow the same procedure as the original introduction. Therefore, the provisions are intended to say that if there was a ballot on introducing the BRS and there is a significant variation that was not covered in the prospectus, there should be a ballot for the variation as well.

Brian Binley: The clause is particularly confusing. If a variation demanding more money by way of the levy is refused by business and the ballot goes against the local authority, who then foots the bill, given that the project is under way, or could be under way?

John Healey: The variation may be a downward variation, because the project economics may have changed. It may not be an upward variation, but in the circumstances that the hon. Gentleman anticipates, if the ballot went against the variation, that variation could not be made. If there was then a project shortfall, there would clearly be a challenge for the project sponsors and the project authority to deal with it in a way that was different from the variation of the BRS that they were proposing. There is not a single answer to who might pick up the shortfall or how it could be dealt with, as he will appreciate. The important thing for the purposes of the Committee and the legislation is that if a ballot is held in order to introduce a variation to the BRS and that ballot is not carried, the variation cannot be put in place.

Brian Binley: I am most grateful for the Ministers great generosity. He mentioned that the local authority could have overestimated the amount of money needed from business as a percentage of the project. Is he therefore suggesting that, in certain circumstances, business might get a dividend, a repayment?

John Healey: I would not necessarily describe it as a repayment or a dividend, but the hon. Gentleman will appreciate that we have built into the power to design and introduce a supplement certain flexibilities for a local authority. It can introduce it at a lower rate than the 2p maximum. It can introduce it and create the liability for businesses that are above the threshold only, so it need not be £50,000 plus, it could be £60,000 or £70,000. That is a decision that local authorities could take. There is also the flexibility to phase in the introduction, so the local authority might choose to introduce it at a rate of 0.5p in year one and 1p in year two. There is also flexibility in how to deal with the potential liability of empty properties.
A number of factors provide flexibility for the local authority. We tend to dwell on the limits to the supplementthe £50,000 rateable value threshold below which no business rate payer would be liable, or the 2p maximum supplementbut the design and introduction of the levy could be different, although within those flexibilities and parameters. To return to the original question, it may be that the variation will benefit the business rate payers that are liable for the levy, although that benefit should perhaps not be described as a dividend. There could be a variation to the threshold, or the rate, or to something else within the flexibilities that local authorities will have within the design of the legislation, which would benefit the authorities concerned.
Subsection (2) sets out the requirements of an authority in those circumstances. Subsection (3) sets out what the document explaining the proposed variation must specify. I hope that members of the Committee would agree that the requirements to consult and the conditions that must be met for the introduction of any variation to the BRS will give businesses real confidence that a BRS will not be altered without serious and due consultation. In practice, any local authority that even contemplates a variation on an established BRS will examine the case with the principal interest groups in its area, not least business itself, before any formal consultation point is reached. We can reasonably expect that any variation will not come as a surprise to those businesses that are liable to pay a BRS, or to any groups with a critical interest in the BRS and the project that it supports.
Subsections (7) to (11) cover the arrangements for ballots in case of variation. We have dealt with the circumstances in which that would be necessary, but the subsections capture them. Subsection (10) describes the wording for any ballot, following the model of the original wording proposed in the Bill.
Finally

Mark Field: Normally when a parliamentarian says, Finally, he is about 40 per cent. of the way through his speech, so perhaps my intervening is not too much of an imposition[Interruption.] I am being unfair to the Minister.
The logical way of easing the pain on the variation is simply to add a certain number of years to it. It would not mean additional money, and the percentage would not be seen as being of a bigger pot; there would just be a significant extension to the number of years that the BRS operated. Does the Minister have any guidance on variation? Presumably, if we extend the period of a scheme for which there is likely to be a BRS from 20 years to 40 years, that takes it well outside the realms of what was envisaged at the outset. Indeed, one envisages, therefore, double the money going in to the BRS over that period. Does the Minister intend to give any guidance, or does he have any thoughts about variation? Would it necessarily mean the sum paid, or the duration of the scheme? Does he feel that the pill could be sugared more easily by adding to the durationadding some years further down the linerather than by adding a surcharge, which would make the whole scheme larger? Has he given any thought to how a variation would operate? I appreciate that the Government have gone into considerable detail to ensure proper re-consultation and a further ballot, but, in practical terms, what will a variation mean?

John Healey: We have given a lot of thought to how a variation might operate and be required, but, in the legislation, we have tried to frame a general approach whatever the precise details of the proposed variation. I had not mentioned it, but the hon. Gentleman is right that a variation might well be the length of the project to be financed and, therefore, the length of the BRS term. I shall take the Mayors proposal for a 24-year term for Crossrail, for instance. In preparing for a business rate supplement, he might say, We proposed it for 24 years, there may be circumstances in which we would have to extend it to 30, and the circumstances that might require us to do so are X, Y, Z. If that potential variation had been set out in the prospectus, it would fall within the terms of the clause in the way that I have explained. If the potential variation was not foreseen or set out in the prospectus as I have explained, a fresh process of consultation with the prospectus and the details would need to be published.
If a ballot was used for the BRS in the first place, that would of course be used again. Also, if a variation would take the proportion of the project funding over one third, a ballot would be required for that variation, whether or not one was in place when the BRS was first introduced. On that basis, I hope that hon. Members will be content for clause 10 to stand part of the Bill.

Bob Neill: I am grateful to the Minister for his careful and detailed explanation of the effect of the clause. I do not think that there is a great deal of difference between us in what he is seeking to achieve, but I will highlight the areas for concern flagged up in our evidence sessions and elsewhere. I hope that the Minister will be able to reassure us that the Government are alert to them.
The concerns relate to two things. I hinted at one in my intervention, although perhaps I did not make it very clear. A variation of the BRS that does not fall within the existing criteria for triggering a ballot could still shift the burden of funding within the BRS scheme. For instance, it could be proposed initially that a fifth of the costs of a substantial scheme would be met by the BRS and the rest would come from various other funding streams, but for reasons that arise, it could be proposed to raise extra moneys by varying the length of the BRS or the amount of the contribution within the parameters. That could increase the BRS element from a fifth to a quarter, or to 30 per cent. That would fall just short of the threshold for triggering a ballot, but it would shift more of the percentage burden on to the BRS, perhaps because another funding stream did not come forward or additional unforeseen costs arose.
In such circumstances, consultation must be undertaken, but the businesses have no means of preventing the change. There is a danger that cost overruns, whatever the cause, could easily be shunted on to business without the need to go back to seek proportionate contributions from other funding streams elsewhere. Will the Minister enlighten us as to what safeguards the Government envisage to protect the BRS payer from being disproportionately affected by variations that might change the amount of funding?
I think that the Minister is alert to my second point, because the Government flag it up in their consultation document on the draft guidance. What is to be done to meet businesses fear that variations might be used as a way to make up for lazy or inefficient costing at the initial stage, and how will the Government deal with the risk of cost overruns occurring and being passed on disproportionately or wholly to businesses through the BRS element of the scheme?
The Government have issued some guidance. It is on page 18 of the consultation document. It starts with the question of assessing project costs for the one-third test. It is helpful as far as it goes, but it raises a question that it does not answer. It recognises what is called, in technical terms, the optimism bias in assessment of costs. That is a wonderful phrase. I was not surprised to find it defined, referred to and dealt with in a document emanating from the Treasury. Some of us might think that the Treasury had optimism bias for a number of years, but apparently it is in the Green Book.
The document says:
Optimism bias is the demonstrated systematic tendency for appraisers to be over-optimistic about key project parameters, arising particularly in relation to: capital costs; works duration; operating costs; and under-delivery of benefits.
One might say that that refers to the Olympics budget. However, in reality, that is a fair and sensible point. The Green Book contains further information, but the very fact that that reality has been flagged up needs to be addressed carefully if businesses are not to feel that the floodgates have been openedso to speakby variation. The result could be a series of variations that salami slice further contributions to make up for the failure to take proper account of that optimism bias.

Philip Dunne: Does my hon. Friend agree that the NHS IT project is a fine example of where optimism bias has coloured the delivery of a project for close to a decade?

Bob Neill: My hon. Friend is absolutely right; that is probably as good an example as one could come up with. It demonstrates why it is important to put safeguards in place.

John Healey: Does the hon. Gentleman also appreciate that the example cited by the hon. Member for Ludlow is entirely beyond the permissible range of what could be relevant to a business rate supplement?

Bob Neill: I am deeply reassured by the Ministers point, as I am sure is everyone else.
With the best will in the world, there is often a tendency for those drawing up project costs in the public sector to be, for various reasons, unduly optimistic about their appraisal. Interestingly, that is recognised in paragraph 3.40 of the draft guidance defining acceptable project costs. It makes the point that the
authorities should be mindful...and pay regard to the fact that the assessment undertaken
internally and by themselves, in the
early stage scoping and feasibility work may not accord with the perspective of local businesses.
Harking back to an earlier debate, when the Minister mulls the matter over he will appreciate that that is a very good reason why we should ensure real buy-in by businesses into the delivery of the scheme. It will make that unintended, but not infrequent, consequence less likely to occur. I raise those caveats. I am not saying that we oppose the clause, but underlying issues remain that I am not entirely convinced have been taken on board. I hope he can reassure us a little that, one way or another, they will be.

Philip Dunne: Will the Minister enlighten the Committee on the thinking behind making the rules and, in particular, variations on ballots so different from the balloting process applying to BIDs? In particular, I am concerned that variations could be used, if a project overruns its original cost estimate, to extend the applicability of the BRS to a wider range of businesses that might not be consulted on the variation because they were not consulted on the original ballot. If I understand correctly, the beauty of the BIDs balloting process is that it is a dual voting system. Businesses not liable to pay the bids levy have the opportunity to vote, because as they grow they might become eligible for the scheme. A dual balloting system allows rapidly growing businesses that would have been eligible at the time of the original ballot, had they been that big at the time, to have a voice. Looking into the future, flexibility in the rules on variations, as in the BIDs model, would have some merit.

John Healey: The hon. Member for Ludlow was not with us at the start of our proceedings this morning, when we had a detailed discussion on the principal basis on which it is right to hold a ballot on a BRS. In particular, we discussed why, in this respect, our approach to BRS is different from our approach to BIDs. On BIDs, of course, every business in the proposed area will have a vote, irrespective of size, and may make a contribution. I do not propose to rerun the arguments for our proposals for balloting on BRS, but no doubt the hon. Member for Ludlow will be able to consult the Official Report and come back if he feels that we have not dealt with the issue.
On the concern expressed by the hon. Member for Bromley and Chislehurst, if the variation changes the proportion that the BRS contributes to a project from a fifth to a quarteras he suggestedor to 30 per cent., we still propose to take the approach with the variation that is entirely consistent with the one that we take for the ballot for the BRS in the first place. I explained in my opening remarks the safeguards that are in place for businesses and the requirements that will be in place for local or levying authorities in such circumstances.
In response to the hon. Gentlemans concern about cost changes, whether they come from cost creep or optimism bias or any other factor that might come into play, he may be interested to know that there is a requirement in paragraph 23 of schedule 1we have already debated that schedulefor the local authority, in producing its prospectus for a business rate supplement, to consider carefully and to consult on the policy that it would have if the project were to
(a) cost more than the authority was expecting;
(b) take more time to complete that the authority was expecting;
(c) cost less than the authority was expecting;
(d) take less time to complete than the authority was expecting.
No business will therefore be in any doubt about the approach that the authority anticipates taking in such circumstances. I hope that that reassures the hon. Gentleman and enables him to accept that the clause should stand part of the Bill.

Bob Neill: I understand what the Minister says and I do not think that we will seek to vote against the clause. I hope that he will reflect, and at an appropriate point, or perhaps now, confirm that he would anticipate that if an authority were to set out its policy on these matters in such bland terms that it amounted to a statement of the obvioussuch as, It is the policy of the authority to avoid cost overrunsthat would not be adequate to meet the requirements of the Bill and there should be something specific in the authoritys review and monitoring arrangements to ensure that such a thing did not occur. Otherwise, one can envisage that no authority will say that it is its policy to incur cost overruns. The danger is that one does just enough to make oneself safe from judicial review, but not enough in practice to carry out the monitoring.

Question put and agreed to.

Clause 10 ordered to stand part of the Bill.

None

Liability of non-domestic ratepayers

Question proposed, That the clause stand part of the Bill.

John Healey: The clause sets out who is liable to pay the BRS. It provides that any person who is liable to pay non-domestic rates for a property is liable also to pay a BRS, subject to certain important exceptions. Crucially, the clause provides that a person is not liable for a BRS if the rateable value of their property does not exceed the amount prescribed by the Secretary of State in regulations made under clause 12. We made it clear in the October 2007 White Paper, and it remains clear, that we intend to set that threshold at £50,000 rateable value. In addition, liability for the BRS does not apply to owners of empty properties where there is a zero liability for non-domestic rates, particularly charities and community amateur sports clubs, or if the levying authority, under the powers given to it in the Bill, has exempted owners of empty properties from the BRS.
Subsections (4) and (5) provide the technical basis for determining the BRS. They explain that it is done by calculating the amount for each day of the year on which the ratepayer will be liable for the BRS and totalling those daily liabilities. Subsection (6) defines the chargeable period for a BRS as the period for which the supplement is imposed. Crucially, subsection (6)(b) prevents the chargeable period starting before the day on which the supplement is introduced; that will prevent retrospective liability accruing before that day. Subsection (7) limits the length of the chargeable period to that specified in the final prospectus unless the period has been extended in accordance with clause 10.
I shall leave it at that, Mr. Atkinson. I hope that the Committee will agree to the clause standing part of the Bill.

Bob Neill: I seek to raise two issues with the Minister. I suspect that other hon. Members will wish to speak on them.
We are now, in shorthand, dealing with the question of the thresholds. The Minister will know from the evidence given to the Committee that there is some concern about how a threshold is arrived at. One knows the Governments intention to set a threshold of a rateable value of £50,000, but we are concerned about what will happen in future, particularly in the light of the fact that there will be a revaluation of business rateable values in 2010. I understand that the base data for that will probably go back to 2008.
Will there be enough flexibility to reflect the changed economic circumstances in a swift and timely manner? The particular concern, of course, is that for many businesses cash flow is now the key to survival. They would not want to be faced with a likely increase in burden simply because of a fiscal drag in the threshold that might suck them in. They will want some reassurance on that point.
Some who gave evidence suggested that the figure of £50,000 should be included in the Bill. Indeed, an amendment to that effect has been tabled by the hon. Member for North Cornwall. I am not convinced, however, because doing so would make it difficult to assist business by raising the threshold to take people out of tax. Primary legislation would be required, which is why I am not particularly attracted to that argument. However, the underlying concern is real; businesses will want a little more detail and more reassurance from the Government.
The second point, which is related, is a genuine inquiry; it may not take us any further. I wonder whether any thought has been given to small companies being treated under the section 382 provisions of the Companies Act 2006, when considering whether they met the other tests for threshold liability.

Mark Field: I wish to follow up the point raised by my hon. Friend the Member for Bromley and Chislehurst, which he made very well. We are clearly in more difficult economic times. The Minister is rightI agree with my hon. Friend in that regardthat it is better to have flexibility in the Bill rather than take up the superficially attractive proposition made by the Liberal Democrats.
What was the thinking behind the £50,000 limit? Was it intended to encompass a certain proportion of business, or is there something else implicit in that sum? It is in no ones interests to talk the economy down, but if it were to happen in the retail sector, would it have a significant impact by bringing more businesses within the BRS fold? In the Governments mind, are the provisions currently designed so that a certain proportion of businesses should fall foul of or come within the BRS area?
Let me add that one reason why I left earlier todaysome slightly cheerier economic newswas that I had a lunch at the Regent Street Association, a big retail association. Its news was much more positive than some of the more gloomy retail news that one hears. [Interruption.] I would certainly not use that word, and the Under-Secretary would be most ill-advised to use ithopefully it will not appear on the record.
I had a point, however. Where retailers are flexible, have a quality offering and, in fairness as in central London, have a large tourist marketwe have felt the benefit of a lot of European and American tourists coming here, our currency having devalued in recent monthsthe situation is somewhat less gloomy than many of our newspapers and other media outlets would have us believe. That is not to be in any way complacent, but there is a mixed picture.
I was trying to get to the bottom of the Governments thought processes. Were they trying to attract a certain proportion of businesses into BRS, or was there something magical in their own mind, at this juncture, about the £50,000 limit?

Brian Binley: I do not want to disappoint the Government too much, but I can tell them that the reflections of my hon. Friend the Member for Cities of London and Westminster would not be my reflections from Northampton as to the well-being of the retail sector, frankly. It may be that he represents a slightly more affluent body of electors than I do. That may be the explanation.

Lee Scott: Does my hon. Friend agree that, with the announcements that we have seen just in the past 24 hours, such as Barratts shoe shops going into administration with the possible loss of up to 400 jobs, the implications of the business rate supplements are grave for a number of businesses? We should be concerned about that.

Peter Atkinson: Order. I urge the hon. Member not to reply. We are not having a debate on the general health of the economy. We are talking about something rather more limited.

Brian Binley: I of course accept your guidance and advice, Mr. Atkinson. I dare not do otherwise. However, I seek your guidance because we seem to be straying into clause 12.

Peter Atkinson: Indeed. We are in danger of straying into clause 12, and we have an amendment next with which we can discuss the £50,000. Members, bear that in mind, please.

Brian Binley: I shall make my remarks on the threshold with that amendment.

Philip Dunne: In relation to the clause, during the evidence session with the Minister I asked why exemptions would not apply to public buildings of more than £50,000 rateable value. The Minister gave me a clear reply. I asked if he would look again or explain why, in relation to the exemptions permitted under subsection (3)(a), the levy would not apply to those properties exempted under section 45A of the 1988 Act. That would not appear to cover many properties owned by types of entity that were perhaps not in contemplation under the 1988 Act, because the form of incorporation may not have been established or used for comparable purposes. I am thinking of premises used by entities that may not be charities but which have a charitable purpose, such as social enterprises, not-for-profit organisations or companies limited by guarantee, which are themselves not for profit. Such organisations should have the benefit of the same reliefs as those that do happen to be established as charities, perhaps for historic reasons. I urge the Minister to consider broadening the exemption from the non-domestic rate in the first place to such categories. If he cannot bring himself to do that in this clause, perhaps he will consider extending the reliefs available under clause 15 when we get there.

John Healey: I will deal with the points in reverse order, if I may, beginning with those made by the hon. Member for Ludlow. I will look at the Official Report, but I was not clear what sorts of organisation or business he was arguing should enjoy reliefs from the business rate supplement when reliefs are not established as part of the business rates system. As I have explained to the Committee, we are trying to build the business rate supplement to follow precisely the terms of the business rate system. It is less complex, more certain and, it seems to me, more equitable to do so.
The importance of the measures in clause 11 that the hon. Gentleman mentioned is that community and amateur sports clubs and charities already have an established relief in mainstream business rates legislation. We propose to carry that over with the business rate supplement. I am not sure that it is consistent or the right place in practice to introduce new entitlements to relief from business rate supplement if those are not already established within the business rate system. As I said, if I might have some clarification about whose interests he was arguing for, I will consider the matter, but that is our approach.

Philip Dunne: I am happy to help the Minister. We talked about it in the evidence session. I referred to publicly owned buildings such as schools and hospitals, and he made the same point then that he clarified just now. I was considering entities similar to those exempt under subsection (3)(a), such as social enterprise and not-for-profit organisations.

John Healey: Unless such organisation have an established right to relief within the business rates system as charitiesmany social enterprises are also registered charitiesor community and amateur sports clubs, some of which are also registered charities, it does not seem consistent or appropriate to create new categories of relief within business rate supplement legislation. That is a matter for mainstream non-domestic rates legislation.

Bob Neill: That is helpful. The Minister makes the point about not desiring to create new categories of relief. May I take it, then, that no representations have been made to him from any source seeking to create new categories of relief through the Bill? For example, new businesses might be exempt from liability to the business rate supplement under the Bill.

John Healey: I have had no representations sufficiently persuasive for me to believe that the current approach is the wrong one. Clearly, if that becomes a matter of debate, it is a matter of debate, and we will deal with it as and when it arises.

Bob Neill: I know that the Minister will take this in the spirit of genuine inquiry in which it is meant. Has he had any representations from Members of either House in relation to the matter that I just mentioned?

John Healey: Not as far as I am aware. Certainly no amendments have been proposed to the Bill from the other place; no doubt that will come. I was pleased to hear about the good lunch had by the hon. Member for Cities of London and Westminster and interested by the reflections of the people with him. Despite things being tough economically at the moment, it is something of a mixed picture. I know that better than most, having been at home last night in Rotherham, where the constituency faces 713 redundancies at the Corus works at Aldwarke in Parkgate. Incidentally, it is probably one of the most efficient steel-making plants in western Europe, producing some of the best steel anywhere in Europe. It is also true that many other companies are proving resilient to recession, including, I am glad to say, some in that constituency. We will return to the points that the hon. Gentleman was trying to make about the threshold when we reach clause 12, Mr. Atkinson, as you have encouraged us to do.
Finally, the hon. Member for Bromley and Chislehurst referred to a concern about the impact on small companies, and he may recall how, in an earlier sitting, we dealt with the prospectusthe work, the analysis and the assessment that will have to be undertaken as part of any case that a BRS may support. That is where the work on the costs, the potential impact and the wider economic benefit of the businesses that may be liable for a BRS will have to be laid out. We are keen to encourage that. It is clearly an important part of the assessment of the pros and cons of any BRS and, on that basis, I hope that Members will be happy to allow the clause to stand part of the Bill.

Question put and agreed to.

Clause 11 ordered to stand part of the Bill.

Clause 12

Rateable value condition

Daniel Rogerson: I beg to move amendment 16, in clause 12, page 8, line 21, leave out prescribed by regulations and insert specified in subsection (1A).
(1A) The amount is £50,000.
(1B) The amount in subsection (1A) may be amended by regulations..
We turn to the question of an amount, £50,000, in connection not, I hasten to add, with any proposed amendments to the Bill, but with the threshold that the Government are minded to implement through regulations. In the debate about the previous set of amendments, I made the point about being clear to people about what is intended, and the Minister is absolutely right that he and his colleagues have signalled that intention throughout. However, it is an important principle that, wherever possible, as much information as possible be provided in the Bill.
On the amount, we heard witnesses from the Royal Institute of Chartered Surveyors, who thought that the threshold was too high, and Dr. Grail, from British BIDs, who thought that it was perhaps too low. So, I am not entirely wedded to £50,000; the point is that, as early as possible, the Governments intention should be published in the Bill. However, on the point raised by a Conservative Member about the amount being fixed in primary legislation, the amendment would allow it to be changed by regulation, as is the case in the current circumstances. An amount would be mentioned to start with, but we could revisit it in secondary legislation. The amendments only significant change would be the introduction of a starting point.
That is an important principle. These are highly significant changes to the operation of the business rate in the areas where it will be applied, and affected businesses will expect not only to be consulted on individual projects and, wherever possiblealthough sadly not in every caseto be consulted through a ballot, but to have every indication of how the provision will begin to bite, so that they can begin to plan accordingly. The principle is not that I think £50,000 is necessarily the right amount for ever, but merely that it is a starting point that might be amended by regulation; otherwise, the issue will be left hanging as the Bill makes its way through the House, and at some point regulations will be introduced. It is a fairly straightforward amendment, and I should be interested to hear the views of other Committee members.

Bob Neill: Understanding as I do the motivation behind the amendment of the hon. Member for North Cornwall, for the reasons I advanced earlier in relation to previous amendments I am still not convinced about putting a sum in, even with the caveat of making it changeable by regulation. That would take us back to where we almost are anyway, where it can be changed by regulation in any event. However, the hon. Gentleman raises an important point that we need to explore. How is the £50,000 figure arrived at? What magicor otherwiseis there in that, and what justification do the Government use for that?
I am conscious that that figure stems partly from the Governments impact assessment and other soundings that it has taken. The impact assessment was, I believe, signed off on 28 November. However, although it is not apparent from the documentI am sure that the Minister can help us hereI imagine that the field work for that would have been taken among the business community at an earlier stage, when the degree to which businesses would become hard pressed by the recession was perhaps not apparent.
What thoughts have the Government had of reviewing the appropriateness of their initial estimate of £50,000 in the light of the ongoing economic developments and downturn that we been discussing? In a sense, £50,000 is signalling up what the Ministers starting point for the regulations will be, and in a way I am grateful to him for doing so. Without even getting to the stage of introducing regulations, should he be thinking again as to whether £50,000 is the appropriate starting pointnever mind whether we then need a power to vary it subsequently in the light of further developments? Have events since that idea came into his mind, and since the impact assessment, not already given rise to a need to revisit it? A commitment to do that before the Bill is enacted and the regulations are brought in would be a welcome reassurance to businesses.

Brian Binley: My hon. Friend the Member for Cities of London and Westminster referred to retail in Oxford Street. We all know that the value of the pound has impacted massively on that area. I did not want to raise the hopes of Government Members in that respect.
I support the overall thrust of this amendment and the concern behind it. However, my reason for not being able to support it is that I genuinely think that it will build into the Bill a level which may well need to be higher. My concern is that the Government are minded to have a £50,000 limit, and I should like the Minister to say where the information came from to convince the Government that they should set the limit at that level. It is a pretty important figure and will impact upon the way people think about the Bill for many years to come. We are not talking about a frivolous figure picked from the air; it will have real import for business for many years.
I am concerned about that level, not least in relation to when the Bill takes effect, which is not until April 2010, as I understand it. That coincides rather nicely with a rate revaluation that is due to take effect that year. The concern must therefore be that many more businesses than we might think of at the moment will be caught in the BRS net because of that revaluation. Whereas £50,000 may seem a sizeable figure at the moment, it may be that after revaluation it will not seem so at all. That concerns me enormously, and I would like to hear the Ministers thoughts about that situation.
We are not sure about the Governments thinking in the longer term and we are not sure whether they will increase the level in relation to revaluation. The chances are that, because they have said that they are minded to introduce £50,000, that will not be the case, so we can expect many more businesses to be involved. I have an especial concern in that respect for retail. Section 31 of the impact assessment, on page 13, states:
BRS will be based on the RV of non-domestic properties. Therefore, businesses likely to have high rateable values, such as retail, could be disproportionately affected by BRS.
That is immensely concerning. It is true that in the big city areas, most of the town centre businesses in particular, which sit in the areas of high rateable value in the centres and the main shopping areas of towns, lease their buildings. Section 31 goes on to tell us that
businesses which do not own their properties are likely to bear significantly less of the cost than owner occupiers.
That suggests that the whole process that has created what many call clone Britain in our high streets will be accentuated, accelerated and added to by the measure.
There is no doubt from a retail perspective that it is in the interests of a retailer not to own the property that they operate from. That is clearly stated in the assessment. That may be very well for Oxford street, where the big companies do not own the properties and lease them, but it is not very helpful for many of the businesses in our county towns and country towns, where the owner-occupier is the person who runs the business.
I have been immensely concerned about the decline of our community hubs in such towns and areas. Indeed, I had the privilege of heading up a commission that reported on that last July. There is no doubt that there is deep concern about the way in which our town centres in such areas are being denuded. They are being turned into clone Britain in one instance, and in other instances local businesses are being forced out. The vital point is that this will bear most heavily on the owner-occupiers of businesses in such towns, and it could be the last straw that breaks the camels back. If that is the case, we will do immense harm to those town centres in rural areas by this very activity. That is why I ask the Minister to consider, in the light of revaluation, an increase in the level at which BRS becomes relevant, in order to give some protection and hope to those businesses that will fall into this net on the basis that they are retailers and also own the property. It will fall most heavily on that particular group of business men in this country, to our detriment.

Lee Scott: On this occasion I shall attempt to get my words to the item and I will not deviate whatsoever. My concerns are the same as those of my hon. Friends. Regarding my own constituency, in the current economic conditions, I would ask the Minister to look at reconsidering the level that has been set. I accept that there needs to be a level of flexibility and that the situation may differ from one region to another. As we heard from my hon. Friend the Member for Cities of London and Westminster, areas such as Oxford street and Regent street are different from my high streets of Barkingside, South Woodford and Hainault. I am sure that they would like the level of business that happens in Oxford street and Regent street, even in the present climate. However, we need an increase on the limit. The figure is not appropriate at this point. I do not believe that most businesses in constituencies up and down the country will be able to thrive with such a figure. We may be able to reconsider that view in the future, but at this juncture, I ask the Minister to look again at the limit.

Philip Dunne: On the amendment and the figure proposed by the hon. Member for North Cornwall, it would be helpful if the Ministerusing the work in the impact assessmentclarified whether the data collected in 2007, which estimated that 90 per cent. of properties fall below the £50,000 threshold, were primarily used to justify setting the threshold at this level. If the revaluation, to which my hon. Friend the Member for Nottingham

Brian Binley: Northampton.

Philip Dunne: Indeed; Nottingham is another strong retail town. If the revaluation gives rise to a significant increase in the rateable value of properties, has the Minister done any analysis of what proportion of properties will fall below a threshold if it was set at a higher level?

Bob Neill: In the light of the observations made by a number of hon. Members, I should like to add some thoughts for the Ministers consideration. The points that have been made are supported by some of the evidence given in the evidentiary sessions. I am referring to the question about whether the threshold should initially be set higher than the proposed £50,000. The British Retail Consortium tends to support the view that the downturn is disproportionately affecting the retail sector, and that the £50,000 is not a safeguard against that. Jane Milne said that over the coming months, it is expecting to see some 40,000 jobs go in the big chains. Those retailers may well be occupying premises that are above the current threshold and they will, therefore, be caught. None the less, they are as liable to be affected by this as any other organisation. I am talking about their cash flow and the risk to jobs.
Ms Milne also raised concerns about the cumulative effect of the measure together with the annual uplift and the quinquennial review coming up in 2010. She was thinking of a £1.6 billion increase in business costs over that period. Some 90 per cent. of that was the result of the mixture of the uplift and the revaluation. Therefore, is that an argument for having the initial threshold set at a higher figure, because it would take more people out of liability?
There was support for those concerns in the evidence from Julian Lyon from the CBI. He said:
From the point of view of the £50,000 threshold, or whatever the threshold is, it is important to understand how business rates work in the market to establish whether the threshold is an appropriate mechanism.[Official Report, Business Rates Supplements Public Bill Committee, 20 January 2009; c. 34, Q140.]
The Minister will recall that he gave evidence of what could be an arbitrary working of the market. Businesses occupying a couple of floors rated as individual hereditaments could fall below the threshold, but if they have two floors that are on a single lease, or on a hereditament, that would fall within the scheme. That could mean that many high street operations have two separate leases and two separate hereditaments with a rateable value oflet us say£40,000 each, which means that they are not caught. If they have them on a joint lease, a single hereditament, and their rateable value is £60,000, they are caught and it will make an enormous difference to their business. Should that not be a reason for revising the starting point of the threshold?
Let me refer to the evidence of Dr. Grail, who was seen as an impressive witness by hon. Members from all parts of the House. She, too, had a concern. She said:
Another thing that I wanted to mention was raised previouslythe threshold. The earlier paperwork
I think that she was referring to things such as the impact assessment
suggested that a £50,000 threshold would safeguard BIDs.
She was concerned about the interaction of the business rate supplement with BID levies and the fact that that might damage the willingness of organisations to go into BIDs, but she was interested in this case in whether the threshold had a particular effect. In relation to the suggestion implicit in the impact assessment that a £50,000 threshold would tend to safeguard BIDs, because many companies would not be affected, she said:
Our evidence is to the contrary. We have done detailed analysis of 23 BIDs around the countryall different sizes and typesand 86 per cent. of the BID levy is over the threshold. In London, only one BID is unaffected by the thresholdthat is, it falls so far below it that...it would be okay. The rest are not safeguarded by that figure at all.
Her conclusion was that if we want one of the impacts of the thresholdI appreciate that it is not the sole impactto be safeguarding the viability of BIDs,
the threshold needs to be way higher, to give the majority of BID levy payers a safeguard.[Official Report, Business Rate Supplements Public Bill Committee, 20 January 2009; c. 53, Q212.]
Does the Minister not think that that evidence, which we heard only last week, strongly reinforces the arguments advanced today by hon. Members for revisiting the appropriateness of £50,000 even as a starting point, never mind what flexibility we build in later?

Nick Raynsford: I shall be brief. I simply want to bring us back to reality rather than theory. The hon. Member for Northampton, South stressed that he was a practical man and did not want to talk in theoretical terms; he wanted to examine the impact. I remind Opposition Members that the Mayor of London has made it clear that he requires the revenue predicated on the £50,000 threshold for Crossrail, and that if they press the case for amendment of the threshold, which would reduce the number of potential business rate supplement payers, that could damage the funding of Crossrail.
Opposition Members have said that they support Crossrail. They have said that Crossrail is an exception and because it is an exception, they accept that it should proceed without a ballot. Of course, they have the Mayor of London in their party and they have made it clear that they support what he is doing. I just put it to them that if they believe that, they should tonight accept the logic of the £50,000 figure on which the modelling has been done and examine the evidence from the Mayor of London, which shows how that disproportionately focuses the business rate supplement levy on properties predominantly in central London and along the main axes

Brian Binley: I am most grateful to the right hon. Gentleman for giving way. He is held in very high regard in Northampton, not least because he is a native of the town. Will he accept that this is the weakness of tying in Crossrail in this respect? Although it might be important for Crossrail to raise that amount of money, should the fact that it may well be doing sizeable damage to the societies in other parts of the country not be considered? Should we not be fighting for our communities and saying, Maybe we ought now to look again at Crossrail, not least because you wont get a return from the City anywhere near the size of the one that you expected when you first talked about the financing arrangements for Crossrail?

Nick Raynsford: The answer is no because, as the hon. Gentleman will know, the Bill provides the flexibility for authorities to choose alternative thresholds. If they want one higher than the minimum, they can raise it. I hope, therefore, that if Northampton chooses to consider the possibility of a business rate supplement and the hon. Gentlemans fears are real, he will prevail on the local authority, along with the business community in Northampton, to go for a different figure to reflect that point. The flexibility is there to do so. But the key point is that the project that depends on the passage of the Bill, the project that will proceed only if the business rate supplement is agreed, has been modelled on the basis of a £50,000 threshold and the Mayor of London says that the passage of the Bill on that basis is fundamental to funding Crossrail. I hope, therefore, that Opposition Members will be practical when they consider how to vote on the clause and that they will not press an alternative figure, which could only undermine the viability of

Bob Neill: Does the right hon. Gentleman not recognise that there is an inherent contradiction in what he says? He says that the passage of the Bill is fundamental because Crossrail is modelled on a £50,000 threshold, but the £50,000 never appears in the Bill. What it is predicated upon is the use of the regulation. It is a matter of whether the Minister feels that it is appropriate to use the flexibility of the regulation to have a different starting point in a different part of the world to deal with that issue.

Nick Raynsford: That is a good try, but when the hon. Gentleman looks at Hansard he will recognise that I referred to the modelling that has been done by the Crossrail team, under the overall tutelage of the Mayor of London, which is based on the assumption of a levy with a threshold of £50,000. That is the basis, and I am urging Opposition Members to be realistic and practical in their approach and to recognise that the one scheme that we know is dependent upon the business rate supplement will not proceed if their flights of fancy about alternative thresholds are pursued.

John Healey: This is an important part of how a business rate supplement may work and therefore requires the sort of serious consideration given by the Committee this afternoon. It is good to see a contribution from all the Opposition Members on the issue, and I quite understand why.
Amendment 16, tabled by the hon. Member for North Cornwall, would put the £50,000 rateable value threshold in the Bill, rather than setting it in secondary legislation, as currently drafted. When I saw the amendment I was puzzled. Apart from providing the basis of a debate such as this, I could not see why he would want to press the amendment into primary legislation. In his opening remarks, he said that it was because he wanted to ensure that business had a greater certainty about the threshold. The exchange that we just heard between my right hon. Friend the Member for Greenwich and Woolwich and the hon. Member for Bromley and Chislehurst on the Opposition Front Bench also underlines the importance of certainty for any potential levying authority in being able to model a potential yield from BRS as a possible contribution towards larger project funding. For that reason, back in the October 2007 White Paper, we said that we intended to set the threshold at £50,000. The Committee knows that I have been consistent about that ever since. To use the words of the hon. Member for Bromley and Chislehurst, we have signalled up the £50,000 threshold since that time, and we were right to do so.
I have three points to make. First, in response to the question of when we confirm the threshold value, we did that back in October 2007, for those reasons. The second question, which the Committee has been chewing away at, is whether £50,000 is the right level. The third is the one that the amendment deals with, which is whether the threshold value should be in primary legislation or whether we should have the flexibility to deal with it in secondary legislation. To be fair, the amendment would put it in the Bill but retain the flexibility of subsequent amendment by regulation, which sort of undermines the case for introducing it in the first place.
Having dealt with the importance of consistency and certaintythe reason why we announced our intent to set the threshold at £50,000 early, and our continued intent to do soI turn to the question of the £50,000. It is, in the end, a judgment, based on a number of factors. The critical factor is the extent to which a potential business rate supplement, even with safeguards such as the 2p limit, would place a burden on business, and the extent to which we can deal with that through a thresholdone that would nevertheless give the levying authority the sort of yield that makes the BRS worth while.
Our assessment of business rates and the size of business suggests that the proportion of costs for businesses with a turnover of about £100,000 is significantly greater than for bigger firms. We are concerned about small firms. For those with a turnover of between £500,000 and £1.9 million a year, business rates as a proportion of their costs generally tail off significantly. That is particularly so for firms with a turnover of more than £1.9 million.
I accept that those figures will not be precise in all circumstances; I am giving the Committee an indication of the sort of analysis and modelling that led us to our decision on the figure of £50,000. Businesses with a rateable value of more than £50,000 will, on average, have a turnover of £1.9 million or more. It is logical. The larger the company, the more likely it is to have premises with a higher rateable value; the larger the turnoverthe larger the companythe smaller will be the relative proportion of the business costs, of which business rates form part.

Bob Neill: I understand the logic of the Ministers argument; the impact assessment shows how those figures are arrived at. In a sense, he flagged up my concern when he said that the £50,000 threshold was mentioned in the 2007 White Paper. I understand how those figures might have been arrived at then, but has he asked his officials to revisit themin particular, the suggestion that businesses with a rateable value of more than £50,000 will on average have a turnover of at least £1.1 million in the light of the economic developments since October 2007? That proportion may have changed, and many businesses that had a turnover of £1.1 million may no longer do so, but the rateable values will not have changed.

John Healey: The hon. Gentleman is probably overstating his argument. I shall deal later with other flexibilities that are intended to allow scope for the introduction of the business rate supplement. That may help the Committee.
Essentially, businesses with a rateable value of £50,000 or less are responsible for about only 40 per cent. of the total business rates yield. By setting the threshold at £50,000, given the general correlation with turnover and recognising the relatively small part of the yield from business rates that is returned from businesses with a rateable of less than £50,000, we can protect most small and medium-sized companies from being liable to the business rate supplement. In other words, we can protect up to about 90 per cent. of small companies from paying it and still allow the BRS to raise a revenue stream that makes its introduction worth while.

Derek Twigg: Does my right hon. Friend agree that the Opposition seem to suggestI go back to the crux of the argument about trusting local government and its responsibility to make a decision without some form of ballotthat despite the economic downturn and the resulting business difficulties and loss of jobs, local authorities would not take account of the problems? In the current economic climate, what local authority would want to push firms out of business and make people redundant? I find that bizarre. The crux of the Oppositions argument seems to be that because of the downturn the measure is surplus to requirements, and that we need to raise the threshold because we cannot trust local authorities to take account of such factors.

John Healey: My hon. Friend is right. In an earlier debate we mentioned the requirement for local authorities to make that sort of assessment if they are considering any proposal for a business rate supplement. A number of Members have made the point that no local authority, whatever the nature of the area or its political leadership, is likely to want to introduce policies that drive businesses in its area out of business.

Brian Binley: All the evidence on parking charges in our towns suggests that they are so desperate for money that they will forget the importance of business. That is one of the major concerns of retail outlets in my constituency in relation to the massive business charge rises in my town. I do not buy the argument about the honour of local government when it is under pressure for money, as many authorities are. However, my real concern relates to the points that I made about the revaluation that we expect by 2010.

John Healey: I was going to come to that.

Brian Binley: Then I will sit down.

John Healey: I will deal first with the question of the £50,000 threshold. Essentially, the threshold will allow us to protect about nine out of 10 businesses from liability for the business rate supplement while protecting the yield from a business rate supplement to make it worth while as a source of funding for big projects. I think that all Members would recognise that the provision to set the threshold in regulation rather than on the face of the Bill gives the flexibility to ensure that the threshold can be updated, if it is warranted, to continue to offer protection to small and medium-sized businesses, as rateable values may fluctuate considerably over time.
To respond to the hon. Member for Northampton, South, the Bill is given effect by Royal Assent. The date that he mentioned, 1 April 2010, is the date from which the Mayor of London has declared his intention to use this legislation to introduce a business rate supplement for London in order to make his contribution to the funding of Crossrail. The hon. Gentleman is right, as are other Members who made the point, that April 2010 is also the start of the new period for business rates listing. It will be based on a comprehensive revaluation being conducted at the moment by the Valuation Office Agency. The provisional revaluation list will be published, as my hon. Friend the Under-Secretary of State for Communities and Local Government mentioned, in the autumn of 2009.
The Bill therefore contains a flexibility for the Mayor of London, in the light of any assessment that he might make of the revaluation rateable values and the yield required in order for the business rate supplement to fulfil his obligation as part of the Crossrail funding package, to propose his business rate supplement at a threshold above £50,000. Future clauses contain a number of flexibilities available to any levying authority, which will allow it also to phase the introduction of the business rate supplement, taper it or introduce differential rates. There are flexibilities for the levying authority, in this case the Mayor of London, to deal with any consequences thrown up by the revaluation process.
The hon. Member for Ilford, North made an interesting point; I am sorry that he cannot stay for the rest of our discussions. He said that different areas might warrant a different approach, drawing a distinction between his constituency and the situation in Oxford street that was reported to the Committee. He is quite right. That is precisely why we have provided the scope to allow authorities to do things differently in their area if the circumstances of their project or businesses warrant it.
Beyond the question of the new valuation lists, clearly in the long term we will want to see how any BRS works, including the one that the Mayor of London plans to introduce from April 2010. In the longer term, we will also want to take a view on whether the £50,000 threshold remains appropriate. The regulation-making power gives us the scope to vary that threshold, straightforwardly and swiftly, should it be appropriate. The £50,000 threshold will be set in regulations, as long as Parliament agrees to them, but no levying authority will be bound to use it, if it wishes to introduce a BRS with a higher threshold, and if the circumstances of its businesses and project allow it to do so. I hope that that has been helpful and that, in the light of our discussion, the hon. Member for North Cornwall will not press his amendment.

Daniel Rogerson: It has indeed been an interesting debate, and I am glad that I have had the opportunity to prompt that, if nothing else. The Minister rightly said that the Government signalled their intention, way back, to set £50,000 as the limit. The right hon. Member for Greenwich and Woolwich hit the nail on the head when he said that the threshold has been so set because that is what suits Crossrail, not because it has any inherent benefit across the rest of the country. However, my party supports Crossrail, so it seems to be a sensible provision, in the light of the fact that currently the only proposal likely to be enacted any time soon is Crossrailin terms of the imposition of a supplementary business rate.
The amendment was prompted by my dislike of doing things later by secondary legislation. I think back to my experience on previous Bills. Many of the questions and concerns raised by organisations, whether professional bodies, non-governmental organisations or whatever, concern what is to come laterthe devil being in the detail. Arguably, a greater level of scrutiny is possible when primary legislation is being considered.

Bob Neill: I apologise if the hon. Gentleman feels that I am using him as a vehicle to raise a point with the Minister that I failed to flag up quickly enough earlier. Does he agree that perhaps one of the reasons for the concern that he and I share, which was expressed by businesses in their evidence, resulted from a phrase in the impact assessment, where it mentions the £50,000 threshold, which it states will be set out in secondary legislation? He just referred to that. It continues:
To provide consistency, this threshold will be standardised across England.
That might have led people to fear that the threshold could not be set at a higher level in other areas. That appears now to have been conceded by the Minister. Does he agree that it would be helpful if the Minister could make it clear that £50,000 is the standardised minimum threshold, but that it can be set higher? That might affect peoples attitudes.

Daniel Rogerson: I am happy to be a conduit for the hon. Gentlemans point. If the Minister wants to address it, I am happy to take a further intervention from him.
The Ministers argument seems to be that the Government have been very clear that £50,000 will be the threshold, so it does not need to be in the Bill. My point of view up until now has been that if it is going to be £50,000, it might as well say it in the Bill. We take slightly different views. In my view, if the threshold has been made clear, there is no reason not to put it in the Bill, rather than make it the subject of regulations. The intention is clear, at least in the short term for the one likely major project, so we might as well put it in the Bill.
I have a personal dislike of leaving primary legislation as vague as possiblewith all due regard to flexibilityand allowing things to be settled in another Committee, at another time, when perhaps less attention is focused upon it. However, as we have had the chance to debate the issue and I have heard the views of the Committee, it is clear that although there is a range of views, it would be inappropriate to include the measure in the Bill. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question put forthwith (Standing Orders Nos. 68 and 89), That the clause stand part of the Bill.

Question agreed to.

Clause 12 accordingly ordered to stand part of the Bill.

Mark Field: Have I missed my chance?

Peter Atkinson: I have put the question and it has been agreed, and anyway, I would not have allowed a stand part debate.

Mark Field: I wanted to touch on something, but perhaps I can do so at another point, Mr. Atkinson.

Clause 13

Chargeable amount

Question proposed, That the clause stand part of the Bill.

John Healey: Now we come to the maths. The clause sets out the method for calculating the BRS chargeable amount for a day. The way in which the chargeable amount is calculated depends on whether the property in question benefits from one of the existing mandatory or discretionary reliefs from the mainstream business rate, in other words, from the national non-domestic rate.
Subsection (2), with a neat little formulaA multiplied by B over Cprescribes the formula for calculating the daily chargeable amount where no rate relief is granted in respect of the property. Liability for BRS in those circumstances is calculated by applying the BRS multiplier, which is defined in clause 14(3), to the rateable value of the property and dividing the result by the number of days in the financial year. I can tell that the hon. Member for Northampton, South is still with me at this point. Where the rateable value of a partially occupied property has been apportioned under clause 12(2) and (3), the BRS multiplier is applied to the rateable value for the occupied portion of the property.

Mark Field: I might take the opportunity to come back to the point that I was trying to make earlier, which is to do with the rules of apportionment to which the Minister referred. To ease administration, we must try to ensure that the rules of apportionment are the same for the BRS as they would be for the main business rate. Will the right hon. Gentleman consider the notion that in clause 12 and in the mathematical formula in clause 13 and further on in clause 17, it is suggested that the levying authority may proceed on a different basis from that adopted by the billing authority as regards part-occupied buildings and jointly owned premises, for the purposes of apportionment?
Further on, clause 18 assumes that a BRS might be levied for less than a full year. That would provide many billing authorities with considerable practical difficulties, as they would be required to collect two amounts on two different bases. I accept that it might be an unusual situation to have a BRS for a period of less than six months. In relation to apportionment, will the Minister give us some guidance on the practical difficulties that will face billing authorities if the BRS is not to be apportioned on the same basis as the existing business rate?

John Healey: I can understand that the hon. Gentleman would be concerned if the apportionment bases were different for the BRS and the business rate, not least because he would worry about what effect that would have on the formulae, but the apportionments have the same basis. The valuation for the authority, which is referred to in the previous clause as undertaking the apportionment, will of course be the valuation of an agency specialist, so I think that I can reassure him that we will not have the problem that he is concerned about.
The formulae deal with the calculation of the liability according to different reliefs that may be in place. Subsection (3) deals with occupied properties to which small business rate relief is granted. Subsection (4) does the same for charities and community amateur sports clubs where there is mandatory relief. Subsection (5) deals with occupied properties where mandatory rural rate relief is applicable and subsection (6) does the same for empty properties. Just to be clear, subsection (6) applies only when the Secretary of State or, in Wales, the Welsh Ministers make an order under section 45(4A) of the Local Government Finance Act 1988, which reduces the liability for national non-domestic rates of empty property owners to less than 100 per cent. of the basic liability. Finally, subsections (7) and (8) deal with properties where discretionary relief or hardship relief have been granted in respect of the business rate payers main business rates liability. I hope that that helps the Committee.

Philip Dunne: A property that was subject to business rates may become vacant and then subject to the empty property levy, which is a modest discount to the full rate, but no longer benefits from the relief that it used to secure. If that property ceases to be habitable for any reason and is therefore no longer subject to empty property relief, would it cease to be leviable for BRS if it ceased to be leviable for normal business property rates?

John Healey: I think that the circumstances of the propertythe hon. Gentleman describes them as habitablemean that it would not be eligible for empty property relief. I think he means that, as an empty property, it would not be liable for business rates rather than for the relief. I shall double check this, but essentially our approach is that if a property is liable for business rates and falls within the liability criteria for business rate supplement, the supplement follows the business rates liability. Therefore, if the empty property is no longer liable for business rates, it will no longer be liable for business rate supplement. We have tried throughout the Bill to follow a consistent principle, as I have explained to the Committee before, building the supplement on the basis of the business rates system and the liabilities in it.

Question put and agreed to.

Clause 13 ordered to stand part of the Bill.

Clause 14

Chargeable amount: supplementary

Question proposed, That the clause stand part of the Bill.

John Healey: The clause may seem inconsequential, particularly as supplementary is in its title, but it is important for this reason: subsection (6) places an upper limit on the multiplier for any single BRS imposed by a levying authority of 0.02, or 2p in the pound of rateable value. That is where the cap will be applied. Subsection (7) places the same overall upper limit on all business rates supplements imposed by a levying authority in a financial year if there is more than one. Finally, in addition, subsection (8) provides that, where a levying authority levies in a year a supplement or supplements that are lower than the overall 2p ceiling, individual supplements cannot increase above the amount specified in the final BRS prospectus for the year, or in line with a variation under clause 10. Those are important points to put on the record, and I hope that they are helpful to the Committee.

Question put and agreed to.

Clause 14 ordered to stand part of the Bill.

Clause 15

BRS relief

Question proposed, That the clause stand part of the Bill.

John Healey: Clause 15 allows levying authorities to grant relief on the payment of business rate supplementsa matter that we touched on in earlier discussions. When a levying authority decides to grant BRS relief, subsection (2) provides that the chargeable amount must be calculated in accordance with the rules set by that authority. That gives a levying authority flexibility to decide precisely how the relief should be applied. It could set a threshold for BRS liability that was higher than the £50,000 rateable value prescribed by the regulations under clause 12, or it could introduce a taper, applying for example a multiplier of 1p for properties with a rateable value of less than a set amount and 2p for those with a rateable value of more than that amount. Another approach enabled by the flexibility in the clause is to phase in a BRS over a number of years, so that, for example, a 0.5p multiplier is introduced for the first five years of a project, a 1p multiplier for the next five years, and a 2p multiplier for the years after that.
Finally, subsection (3) sets out the conditions that must be met before the relief may be applied. The relief can be based only on rateable value and it must be applied uniformly to all types of hereditaments and owners or occupiers. A levying authority could not apply relief only to warehouses or certain types of retail outlets. That ensures consistency and fairness across the BRS area.
I hope that, on the basis of those remarks, members of the Committee will now allow the clause to stand part of the Bill.

Bob Neill: I just want to give the Minister the opportunity to come back to the point that I sought to raise earlier. I am grateful for what he says about the flexibility measuresthe taper and the threshold settingthat are intended to be given in the form of reliefs. Perhaps the Minister in his reply will pick up the point that I sought to raise via the hon. Member for North Cornwall. When the right hon. Gentleman says that under this provision the local authority will be able to set a threshold that is higher than £50,000, is that without prejudice to the statement on page 14 of the impact assessment:
To provide consistency this threshold will be standardised across England?
Is it the case that the minimum guaranteed protectionI see nods from those who advise the Ministeris £50,000 but that a local authority will have the flexibility to increase that protection if circumstances in its area so warrant? Such recognition of the situation would be useful and would come as some reassurance on that point.

John Healey: I apologise to the hon. Gentleman. To be honest I did not pick up that point because I thought that it was evident in what I was saying. We want to ensure a base consistency and will legislate for that threshold. The Bill provisions allow a levying authority to set thresholds that are higher than that £50,000 rateable value, should it decide that that is appropriate. The hon. Gentleman quoted accurately from the impact assessment: it does refer to England. The Bill would require Welsh Ministers to set an appropriate threshold for Wales, similar to the way in which under regulations we set a threshold of £50,000 for any BRS in England.

Bob Neill: I am sorry if I was being a hard-headed lawyer in pinning the Minister down on that point.

Question put and agreed to.

Clause 15 ordered to stand part of the Bill.

Clause 16

Interaction with BID levy

Bob Neill: I beg to move amendment 30, in clause 16, page 11, line 37, leave out subsection (1) and insert
(1) Where a person is, by reference to a hereditament, liable for BID levy in respect of all or part of a financial year in respect of which the person is, in relation to that hereditament, subject to a BRS imposed by the authority, the chargeable amount payable in relation to the BRS shall be offset in accordance with subsection (2)..

Peter Atkinson: With this it will be convenient to discuss the following: amendment 31, in clause 16, page 11, line 43, leave out
to the extent specified in the rules.
Amendment 32, in clause 16, page 12, line 4, leave out subsection (4).
Amendment 17, in clause 16, page 12, line 8, leave out paragraphs (b) and (c).
Amendment 33, in clause 16, page 12, line 9, at end add
(5) This section does not apply to the Crossrail project..
New clause 1BIDs: supplementary provisions
(1) The 2003 Act is amended as follows.
(2) After section 41 insert
41A Additional arrangements where business rate supplement imposed
(1) In any business improvement district where a business rate supplement under the Business Rate Supplements Act 2009 has been imposed, a property owner BID levy may be imposed on the owners of non-domestic property, or a class of such owners, in the district.
(2) A non-domestic ratepayer who is liable to pay the BID levy on a hereditament is not liable for a property owner BID levy on that hereditament, and may not take part in a property owner ballot in respect of that hereditament.
(3) In section 46(1) (description of non-domestic ratepayers liable for BID levy to be specified) insert at end , and, where applicable, the description of property owners who are to be liable.
(4) In section 49 (BID proposals) after subsection (2) insert
(3) A levy on property owners may come into force only where it is approved by a ballot of the property owners in the proposed business improvement district who are liable for the proposed property owner BID levy.
(5) In section 50 (approval in ballot) after subsection (6) insert
(7) A property owner BID levy is not to be regarded as approved by a ballot held for the purposes of section 49(3) unless the two conditions set out in subsections (2) to (6) are satisfied.
(6) In section 55(2) (regulations about ballots)
(a) in paragraph (b) after  ratepayers insert and property owners, and
(b) after paragraph (h) insert
(i) enabling the billing authority to construct a list of all property owners in the BID area for the purposes of holding a property owner ballot and billing..
Amendment 45, in title, line 3, after development;, insert
to make provision about business improvement districts in consequence of the imposition of a business rate supplement;.

Bob Neill: We come to a fresh and important set of considerations. It was dealt with in some detail by the witnesses who gave evidence to us, and it comes back to the issue of the interaction of the BRS with BIDs. I am happy to say that many of us have seen BIDs work well in our areas. I know that Ministers do not desire to harm BIDs schemes, but those who gave evidence expressed real concern that there is, not for the first time, a risk of unintended consequences and of an adverse impact on BIDs schemes.
Why does that risk arise? First, as we said earlier, the tax-raising power in the Bill is given right across the country. Secondly, it is done against a background of serious economic downturn and pressure on businesses. Thirdly, it is done at a time when, for a number of reasons, there are real constraints on local authority budgets. Finally, and in particular, it is done against the background of a reduction in the funding made available to local authorities for a number of economic development-related purposes, through the cutbacks in the funding of the LABGI scheme. Whether we call it mainstreaming LABGI, or whatever else, the fact is that there will be significantly less money available in the coming two years than was available over the previous years£150 million as opposed to £1 billion.
The real concern that many people have, and which a number of my hon. Friends share, is that this may create almost irresistible pressure upon a local authority to use BRS as a means of making up some of that loss and to push the envelope of the rules to the maximum permissible extent. One might then get a situation where an authority that can justify the economic reasons for a scheme within the rules decides to proceed using a formulation whereby 25 per cent. or 30 per cent. of the monies are raised by the BRS, so the ballot provisions are not triggered. That, of itself, might be well and good, but the evidence suggested that the real concern for many business organisations is the interaction between that scheme an existing or future BIDs schemes in the area. Fear was also expressed about the cumulative effect if other measures are introduced, such as those involving voluntary contributions, the community infrastructure levy, workplace parking levies, and so on. There is a limit to how much can be squeezed out of businesses in those circumstancesone cannot get a quart out of a pint pot.
Because the threshold is not met to trigger a ballot, the business cannot ultimately say yea or nay to the BRS scheme. Realistically, it may not have much choice about the community infrastructure levy because, again, there is no ballot provision for that; nor would it have a choice in relation to the voluntary contributionsthat is a matter of negotiation. The one area where it can say no is the BID scheme. The temptation in those circumstances will be for local businesses to say, The only way that we can prevent an accumulation of burdens upon us is to say no to the one thing that we can say no to: the BID scheme, even though, if the relative value of the BID scheme was ranked against the BRS scheme in a wholly dispassionate world and with an even playing field between the two, they might prefer the BID scheme.
In the current economic climate, the most important thing to them is containing their costs. That creates a perverse incentive to say no to BID schemes that might otherwise have been approved. That might not be the desired consequence, but it is the reality for lots of businesses. That was highlighted in the evidence of a number of witnesses on the effect of the economic downturn.
Even the big multiples are shedding many jobs because their turnover is being squeezed. The Federation of Small Businesses made the point that for many of its members who may be caught above the threshold, cash flow is king. The one thing that they will do is restrict avoidable overheads. If they cannot avoid the BRS because they do not have a ballot, they will avoid the BID scheme. That would be tragic, because BID schemes have worked well and been hugely successful. I accept that the case for them has been proved by experience. They work well because businesses have real and genuine buy-in and the ultimate ability to say no. That is the background and why the measures are an area of concern to us. It is not a fanciful concern; it was flagged up, in one way or another, by all the various business organisations that gave evidence to us.
How can that unfortunate consequence be prevented? It seems to us that the best and safest way is to adopt the desire of all the business organisations to allow an automatic set-off for BID levies. In some cases, it may be said that the BRS deals with a different magnitude of scheme than BID schemes. Sometimes that is the case, but sometimes there will be an overlap. Another idea that might have been available, but which the Government have not made available in the Bill, is to have some reduction in the business rate multiplier to compensate, giving a set-off that way. However, that is not on the table, so we cannot sensibly advance it.
How can we protect the growing BID sector from damage in this difficult time? We can permit the automatic set-off. That could then be compensated in other ways, such as how thresholds or other poundages are adjusted within the scope of the Bill. It would at least create a situation of clear linkage between the area of a BID scheme, which might cover the whole of a local authority that also wants to do BRS, where there is substantial overlap. The automatic set-off would be a reassurance to businesses that they will not be hit, in effect, by a double whammy. That is the thinking behind the amendment. As you will have noticed, Mr. Atkinson, the amendments main thrust is to insert a new subsection (1) into clause 16 to achieve that effect, and other consequential amendments follow.

Nick Raynsford: My particular interest focuses on new clause 1 and amendment 45, which stand in my name. They deal in a different way from that proposed by the hon. Member for Bromley and Chislehurst with the problem of the potentially unhappy interface between BIDs and BRS.
We have established that the two vehicles are broadly designed to meet different needs. BIDs are focused predominantly on local measures to improve the viability, attractiveness, safety and therefore commercial success of shopping areas, business districts, town centres and so on. BRS is predominantly likely to be used for major infrastructure investments or longer-term improvements to the economic attraction of a particular area; Crossrail will definitely be used for that purpose. However, despite the differences, there could still be circumstances in which the introduction of the BRS could have an adverse impact on BIDs. We heard strong evidence from Dr. Julie Grail and others about the possible knock-on consequence for the viability of bidsparticularly where they are coming up for renewalif businesses have been required to pay a BRS levy and feel that that is enough and they cannot therefore justify continued support for BIDs. That is a genuine problem that we need to address.
The Opposition proposal, which came from the hon. Member for Bromley and Chislehurst, is to have an automatic offset against the BRS to provide and direct financial compensation. As we heard from other witnesses, and as the hon. Member for Cities of London and Westminster rightly pointed out in the evidence sessions, the problem with that is it will provide a perverse incentive for essentially bogus BIDs to be set up to provide a means of getting out of the BRS contribution. The Mayor of London has emphatically said that that would seriously risk the viability of Crossrail. I notice that the Opposition have tabled an amendment saying that that would not apply in the case of Crossrail, but those are pretty desperate measures on the part of the Opposition, who all the way through have tried to say that they support Crossrail, but that they do not like this mechanism.

Bob Neill: Surely, the right hon. Gentleman should be jumping up to welcome the fact that we recognise the desire to protect the calculations in relation to Crossrail that he was so concerned about. He should reflect on the fact that this is a means of achieving both that and the degree of consistency that he has been urging upon us with the Crossrail Bill.

Nick Raynsford: One thing is clear: there is no consistency whatsoever in the Oppositions position. In order to try to reconcile the irreconcilable, they have made a series of manoeuvres, like the antics of mediaeval theologians trying to work out how many angels can dance on the head of a pin. The Opposition do not like this BRS thing, but because the Mayor of London is committed to Crossrail, they are committed to it. They have therefore got to find a way of squaring of circleit is not very convincing. I personally take the Mayor of Londons advice on this, rather than that of the hon. Member for Bromley and Chislehurst.
The point we must recognise is that BRS could well apply elsewhere. If it did apply elsewhere, exactly the same problem would arise in another city or community where there was an existing BID. The formulation presented to us would have an automatic offset that would not be excluded in that context, because the exclusion only relates to Crossrail. Therefore, we could have exactly the circumstances that the Mayor of London has identified, scuppering the viability of BRS in that context because an automatic offset undermined the financial calculation. That is not a satisfactory solution.
Dr. Grail suggested an alternative, which was a modest, partial offset. That seemed a better approach, but it was not adequate and it was inevitably a bit ad hoc. Her argument was that if it was a modest offset, it would not really provide the incentive to do bogus BIDs in order to avoid liability to BRS. Nevertheless, it would have an impact on the viability of the financial estimates for the BRS, so it is not an entirely satisfactory option.
However, a more fundamental problem that has been around since the beginning of BIDs is that the levy is paid by the occupier, not the landowner. That is inevitable because that is the basis of our rating system. Businesses that are liable to pay rates are on the business rates register and that is the vehicle used to collect the BRS or, indeed, the BID levy. From the outset, when BIDs were first being discussed, people said it would be better to have a system whereby the landowner paid for the BID. That would require the creation of an entirely new rates register that relates to the value of the properties owned by individuals in that area. That, of course, is a complex operation because international ownership would pose serious difficulties in getting an entirely accurate and satisfactory register. It would certainly require a lot of work, and in areas where there was no certainty that a BID would proceed, it would be disproportionate for a local authority to have to go through the process of compiling a theoretical landowner register to put forward a BID proposal that might never happen.
When we introduced BIDs, we accepted that they would have to apply to the occupierthe tenant. We encouraged the concept of voluntary contributions from landowners who stand to benefit from the introduction of the improvements to the area. That has happened to a degree, and in some areas more than others. None the less, there is the problem of the freeloader. With a voluntary contribution, one cannot compel compliance, and some do the right thing and contribute, and others do not. The problem of the freeloader has been there from the outset, and has been a recurring leitmotif that people involved with BIDs have wanted to see addressed.
This is not the occasion to address the BID problem because we are dealing with BRS. None the less, new clause 1 gives us an opportunity to provide a mechanism to introduce a landowner levy to ease interface problems in areas in which BRS will replace BIDs. In that situation, it would not be too onerous a task on the local authority to introduce a register to create a landowner levy because there is an existing BID there. That would give authorities the confidence that some landowners are already contributing. The whole ownership and the knowledge of who owns the property in the area will be better understood because of the presence of the BID. There would be a clear interest on everyones part to get a viable landowner contribution levy into existence to ensure that the tenants have a reduction in their BID levy, which will be a genuine offset against the BRS. I am sorry if hon. Members are struggling to follow what I am saying, but this is very complex stuff.
If we had the landowner levy, there would be an increased contribution from the landowners. That could allow a reduced contribution from the tenant BID payers, which would be the kind of offset that Opposition Members and Dr. Grail want. However, it would be done in a way that would not damage the BRS revenue because there would be no reduction in it. I believe that this is an elegant solution that holds out the prospect of avoiding both the conflict between BRS and BIDs and the damaging consequences of people being reluctant to vote for a BID renewal, particularly in London, in which BRS will have been introduced. We heard the evidence from Dr. Julie Grail about the risk of some big London BIDs coming up for renewal in the next three years being in jeopardy because of this. Such a device does hold out the possibility of avoiding that scenario without jeopardising the viability of the BRS.

Bob Neill: I am following the right hon. Gentleman very closely. In many ways, it is an attractive option; perhaps we can explore it a bit further in due course. Does he envisage an automatic correlation between the moneys raised by the landowner levy and the offset? I am not sure whether that is apparent from the wording of his provision, which I am trying to get my head around; or is it something that would have to be in regulations? I am interested to hear how we can achieve what may be a very satisfactory objective.

Nick Raynsford: I am very grateful for the hon. Gentlemans support. It could not ever be an automatic balancing item because we do not know enough. We would not know the composition of the landowning register until it was compiled, so there would be an ad hoc element to it. None the less, at least there is the prospect of this larger contribution from landowners, which would then allow some reductionwe do not know how muchin the contribution of the BID tenants. That is the key to avoiding a conflict between BRS and BIDs.
I do not expect my right hon. Friend the Minister to accept the amendment, because it involves a change in the title of the Bill, as those who have looked closely at the effect of the amendment will see. We have had to change the scope of the Bill to allow this measure to be included. This is quite big stuff, and I understand that although my right hon. Friend may be sympathetic, he will probably not be able to accept this.
Mr. Fieldrose

Nick Raynsford: I am getting very near to the time to finish, so if the hon. Member for Cities of London and Westminster will bear with this until Thursday morning when I complete my remarks, I will start by giving way to him at that particular point in time.

Ordered, That the debate be now adjourned.(Mr. Watts.)

Adjourned till Thursday 29 January at Nine oclock.